ADB injects $1.5bn loan to aid Thai Covid-19 recovery
The Asian Development Bank (ADB) is loaning Thailand Bt46.7 billion (US$1.5 billion) to combat the impact of Covid-19.
“ADB is committed to providing timely support to Thailand and helping reduce the pandemic’s social and economic impacts on the country,” said ADB president Masatsugu Asakawa. “Our budget support will help fund the government’s relief packages, which aim to better prepare the country’s healthcare system for possible future waves of Covid-19, protect the vulnerable, support small and medium-sized enterprises in industries most affected by the outbreak such as tourism and manufacturing, and provide overall economic stimulus.”
ADB said Thailand remains highly vulnerable to the pandemic due to its deep integration with regional and global economies. Potential surges in Covid-19 cases could overwhelm the Thai health system, warned the bank.
ADB forecast Thailand’s economy to contract by 6.5 per cent in 2020, down from its December 2019 projection of 3 per cent growth. It said that given the country’s strong regional trade, investment and labour links, an economic crisis in Thailand could spill over into neighbouring countries like Cambodia, Laos, Myanmar and Vietnam.
Said Santi Promphat, Thailand’s acting finance minister: “[W]e believe that ADB support to member economies, including Thailand, in response to the Covid-19 pandemic will alleviate social and economic impacts in Thailand and the region.”
The loan agreement is expected to be signed by ADB and Finance Ministry representatives by the end of August in Bangkok.
ADB’s “Covid-19 Active Response and Expenditure Support (CARES) Programme” aims to restore growth and set the stage for targeted ADB private sector operations to support recovery in priority areas such as infrastructure, trade, and supply chain finance. ADB said it will also set up a framework for policy dialogue with the government on crisis response and economic recovery.
The CARES Programme is funded through the Covid-19 pandemic response option (CPRO), established in April as part of ADB’s $20-billion expanded assistance for developing member countries.
Thai government stimulus packages total Bt2.25 trillion for fiscal years 2020 and 2021, the bank noted. That includes about Bt1.2 trillion in cash assistance to 16 million informal workers and 10 million farmer households; supporting the economic and social recovery; and strengthening the healthcare system. SMEs in tourism and other sectors are provided tax incentives, as well as soft loans and debt suspension from the Bank of Thailand. The government has also drawn up a post-Covid-19 economic recovery plan. ADB estimates the stimulus packages could increase economic output by Bt1.6 trillion, or 10.1 per cent of gross domestic product.
ADB is preparing a new country partnership strategy with Thailand, which will support the economic recovery with a pipeline of green and climate-resilient infrastructure projects. The strategy will also focus on rebuilding regional cooperation through the Greater Mekong Subregion working groups on tourism, trade, transport, and health.